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January 22, 2014

US regulators ‘funded at a level to fail’

Even with new budget increases, US securities regulators are falling further behind the market when it comes to technology investment, and the investment advisers and swaps dealers they oversee are likely to remain largely uninspected.

The first comprehensive federal spending plan since 2009, hammered out in Congress last week, raises the Securities and Exchange Commission funding by $29m, to $1.35bn, or $324m below the White House’s request. The Commodity Futures Trading Commission (CFTC)budget rises about $10m, to $215m, or $100m less than requested.

The additional funding sought by the administration for the SEC was intended to pay in part for the hiring of 250 examiners dedicated to registered investment advisers, whom the regulator now examines only once every 11 years on average.


Dennis Kelleher, president of Better Markets, the financial reform advocacy group, contends the technology allocations suggest the SEC and CFTC are “funded at a level to fail”.

“’What both agencies are trying to do is get a better understanding of high-speed computer trading and how it is affecting markets, and yet they are not getting anywhere near the ability to do that,’ Mr Kelleher says. ‘When you cut the reserve fund at the SEC by 50 per cent, and on top of that you underfund them overall, you really are putting them in an impossible position.'”


Read full Financial Times article here

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